Food is one of the biggest industries world-wide. Any business after a certain point in time would need handholding in terms of financing/funding to grow and sustain. Before we start any business especially the restaurant and food services, few factors shall be evaluated in the beginning to ensure the business turns into a success.
Restaurant Business: Initial Factors and Investments
The initial business idea of an entrepreneur shall have a detailed thought on the location of the restaurant for good footfall, the type of cuisine to be served, a staff for accounting and calculating daily sales, clear business concept/format, capital or initial investment to start the operations and for buying the infrastructure.
Depending on the business stage, there are many ways of raising the capital. For instance, Self-funding, Private Investments (family and friends), Partnerships, Bank Loans and an investment from Venture Capital (VC) firms.
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‘Dine-in' model is out and 'dine-at-home’ through cloud kitchens and food delivery start-ups are trending.
Investors in Restaurant and Food Services
The Indian food service market (Full Services Restaurants, Quick Service Restaurants, Cafes and Bars) have been attracting interest of the global private equity and venture capital firms. Some of the firms that have invested in the food services and restaurant business in the last couple of years are:
Sun Capital Partners
Retails and Restaurant Growth Capital (RRGC)
Kitchen Fund
Restaurant Tech
Founders Fund
Khosla Ventures
Sequoia
Insight Partners and Greycroft
Apart from these, some food-tech start-ups have received funding amid the Pandemic from big investors. For instance:
Hoi Foods (Cloud Kitchen) raised USD 2 million in a Pre-Series A funding by 1Crowd, Sprout and a few more
Biryani by Kilo (Cloud Kitchen) raised INR 6 Crore from Angel investors in its series B funding round
Zomato (Food Delivery Start-up) raised USD 250 million recently from five different venture capital firms like Kora, Fidelity, Tiger Global, Bow Wave and Dragoneer. Thus, taking the start-up’s valuation to USD 5.4 billion
Paytm, a fin-tech company has joined the investor club. Last year, Paytm along with NPTK emerging Asia Fund (India) invested in a B2B food-tech firm, HungerBox
Rebel Foods private limited that operates restaurant brands like Faasos and Oven Story has invested in home-chef focussed, FoodyBuddy
And, Spoonshot (a platform to sport and predict food trends) raised USD 1 million from Sri Capital
What’s in it for me?
India’s food services industry was growing at a very fast pace until the outbreak of the coronavirus. Covid-19 dwindled the pace of growth for all businesses except those dealing with the essential commodities (grocery stores, pharmacies, medical stores etc.) throughout the lockdown. After a couple of months, when the lockdown was lifted, people placed orders but preferred home deliveries by ordering online than dining at a restaurant.
India being a huge food lover market, the scope for a restaurant and food services business is huge and it has once again started to rise. The investments in food-tech delivery start-up and cloud kitchen, as mentioned above, are perfect examples of growth if there is a potential for business to grow.
To survive and sustain, one has to think of new ways of serving to hold the clientele back and see what trend can aid the growth of the business further. Deloitte analysis reflects three trends shaping the consumption patterns among restaurant guests:
Ultimate Convenience (drive-through, takeout and delivery)
Frictionless digital experiences (Tech-savvy consumer demand digital engagement from restaurants that recognise them and their preferences
Enhanced safety in the wake of COVID-19 (Remote work models and crowd avoidance are reshaping people’s dining habits)
Either you want to be a part of food delivery start-ups or support the Delivery Only Restaurant, Cloud Kitchen/Ghost Kitchen concept. As an entrepreneur and owner of the restaurant business, you may need to re-think the business model to serve the customers. As a start-up or small business owner you may look-out for the available options to scale up the business and keep these three trends analysed by Deloitte in mind.
The concept of the cloud kitchen is not new in the market. But currently, it is the fastest and safest way to enjoy restaurant-style food at home. Hence, the ‘dine-in’ model is out and ‘dine-at-home’ through cloud kitchens and food delivery start-ups are trending.
